Canadian province moves to temporarily block increased oil shipments

VANCOUVER (Reuters) - British Columbia proposed new rules on Tuesday to temporarily block increased shipments of crude oil through the Pacific Coast province, adding another hurdle to Kinder Morgan Canada’s planned C$7.4 billion ($6 billion) Trans Mountain pipeline expansion.

The western Canadian province’s environment ministry said it is proposing new rules around oil spill preparedness and response, and setting up an independent scientific advisory panel to study whether diluted bitumen spilled in water can be effectively cleaned up.

The province plans to bar any increase in heavy oil shipments - by rail or pipeline - while the panel completes its work. The government did not provide a timeline for the process, though the environment minister, George Heyman, told Reuters it could take “a couple of years” to do a thorough job.

The move comes as Kinder Morgan Canada is pushing to secure permitting to start construction on its Trans Mountain pipeline expansion, which will nearly triple capacity on the existing 1,147-kilometer (712 mile) line to 890,000 barrels per day.

Greenpeace called Tuesday’s measures a “major blow” to Kinder Morgan, while Alberta Premier Rachel Notley lashed out at her western neighbor on social media, saying British Columbia was “grasping at straws” in its attempt to overrule federal jurisdiction.

“Rash actions like these send a message to the world that in BC and in Canada the rules are not what they might seem, and therefore jeopardize investment decisions,” Notley said.

The expansion of the Trans Mountain pipeline, which runs from Alberta’s energy heartland to a port in suburban Vancouver, was approved by the Canadian government in 2016 and met the previous British Columbia government’s conditions for oil export pipelines.

Canada’s Minister of Natural Resources Jim Carr said in a statement late on Tuesday the expansion remains in the country’s national interest, and noted it is “subject to 157 legally-binding conditions to protect the environment and ensure it moves forward in the safest, most environmentally-sound manner.”

The project is supported by Canadian oil producers who are desperate to access overseas markets for their product. But it is opposed by numerous local municipalities, Aboriginal groups and environmental activists.

Kinder Morgan Canada said it will participate in the province’s feedback process on the measures. The company earlier this month delayed the start up of the expanded pipeline to December 2020, due to continued difficulty obtaining permits.

The company’s shares closed down 2.38 percent at C$16.80, while the Canadian energy index shed 2.87 percent.

Reporting by Julie Gordon; Editing by Tom Brown and Chris Reese